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Needham analyst N. Quinn Bolton downgraded both Applied Materials and KLA stock to Hold from Buy.
Dreamstime
Applied Materials
and
KLA
stocks are declining Wednesday after an analyst downgraded both chip-equipment makers, writing that the rally from artificial intelligence “hype” has gone too far.
Needham analyst N. Quinn Bolton downgraded shares of
Applied Materials
(ticker: AMAT) and
KLA
(KLAC) to Hold from Buy Wednesday, and removed his previous price targets of $140 and $460, respectively.
“With SemiCap stocks up meaningfully on the AI hype but with AI unlikely to drive a significant increase in [wafer fab equipment] spending, we believe many SemiCap stocks are overbought in the near-term,” Bolton wrote in a research note. “At least in the near-term, we do not see the SemiCap group as direct beneficiaries of AI spending.”
Both have surged in 2023. Applied Materials stock has rocketed 44% year to date, while KLA stock has logged a gain of 26%.
Applied Materials has a market value of $120 billion—nearly twice that of KLA. Both have been topping earnings estimates this year, while also providing disappointing outlooks.
In late May, Applied Materials said it would spend up to $4 billion in Silicon Valley to build a new research-and-development center. The scale of the project will be contingent on receiving funds from the U.S. government through the CHIPS and Science Act. The announcement helped give Applied Materials stock another leg up.
Applied Materials stock is down 1.3% to $139.90 in Wednesday trading, while KLA stock is 0.7% lower to $476.73.
Write to Angela Palumbo at [email protected]
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